Former Leumi Executive Loses Lawsuit Against Bank, Ordered to Pay Unusual Costs

The Tel Aviv Labor Court this week rejected the lawsuit filed by Gil Karni, former CEO of Bank Leumi UK, against the bank. Karni left Leumi unexpectedly in November 2020 and went on to run Bank Hapoalim’s New York branch. He was ordered to pay NIS 100,000 in legal costs for proceedings that lasted five years and included numerous motions and hearings.

Karni, who worked for the Leumi Group for 26 years, asked the court to rule that he had been dismissed rather than resigned, claiming a substantial deterioration in his working conditions and seeking, as a result, to receive a pension for life. He also argued that there was a practice under which bank retirees in his position were automatically entitled to a retirement pension, regardless of the circumstances of their departure. Ironically, the senior Leumi official whom Karni said had, among other things, harassed him and treated him with hostility has since moved to Bank Hapoalim, where he is now Karni’s superior.

Judge Dafna Hasson-Zakharia rejected all of his claims, ruling that Karni had resigned of his own free will in favor of a senior position at Bank Hapoalim in New York, and that no substantial deterioration in his working conditions had been proven. Karni’s claim that there was a practice under which bank retirees in his position were automatically entitled to an immediate retirement pension, regardless of the circumstances of their departure, was also rejected. The court found that Karni had not proved there had been any intent to fire him or that he had been told he needed to look for another job, as he claimed. Even if he had proved that, the court said, it would still not establish grounds for a substantial deterioration in working conditions.

"Accepting the plaintiff’s position would lead to an unreasonable legal outcome, according to which the very fact that an employer is considering ending an employee’s employment could entitle that employee to full severance pay by virtue of resigning under dismissal conditions," the ruling stated.

Karni also argued in the lawsuit that it was unreasonable to expect him to continue in the role in light of criticism voiced against him in board meetings. On this, the judge ruled: "We are satisfied that the criticism directed at the plaintiff was substantive and relevant to the board’s role, and did not rise to the level of a substantial deterioration in his working conditions or constitute circumstances in which it could not be required that he continue in the position."

Another rejected claim was that Karni’s annual bonus had been reduced from six salaries to 4.5 salaries, which he said constituted a substantial deterioration in his employment conditions. The court ruled that it had been proven that the bonus amount was not a fixed component, but rather a function of the manager’s performance and subject to the board’s discretion.

The claim of harassment was also rejected. "We were not persuaded that the criticism leveled at the plaintiff in the board meetings exceeded accepted norms and rose to the level of 'abusive conduct' under an objective standard. We were convinced that the criticism was professional, that it was voiced in the appropriate forum, that it was intended to ensure alignment with the organization’s goals, that it stemmed from substantive considerations, and that it was expressed within the employer’s right, and even duty, to criticize the performance of its employees, particularly when it concerns a senior management level subject to board oversight," the court said.

Regarding the claim that there was a practice at the bank of granting managers at Karni’s level an unfunded pension, the court ruled that the opposite was true. "The evidence presented to us shows that the entitlement of senior managers to receive an unfunded pension upon retirement is anchored in individual agreements, which are the result of individual negotiations between each of them personally and the bank’s management," the court said.

Bank Leumi was represented by attorneys Nahum Finberg, Yaakov Melishkevitz and Idit Eiges, partners at the N. Finberg law firm.

Karni’s attorney said he intends to appeal. Haggi Shalev, representing Gil Karni, said in response: "We respect the ruling, but we do not agree with it. Karni intends to appeal the decision, as it is incorrect and stands in complete contradiction to the law, case law and the evidence, including regarding the practice that applied to managers with similar characteristics who resigned.

"The evidence is unequivocal and includes clear documents and unequivocal and reliable testimony, which the ruling itself found to be credible, from a long line of senior managers, past and present, including former executives, directors past and present, and the former chief internal auditor of Bank Leumi."